IMF says Australia needs greater housing supply
The International Monetary Fund cited housing affordability and household debt as key issues for Australia's economic future.
The International Monetary Fund has just completed an official visit to Australia. The fund's statement summarising their findings on the future of the Australian economy was positive overall, but focused on "household debt vulnerabilities" and lower housing affordability as concerns.
The IMF expects house prices to cool due to the "building completion rate catching up with demand in the major eastern capital regions" but noted that demand will likely remain strong due to projected population growth and foreign buyer interest.
The IMF was generally positive on regulatory efforts to protect banks' exposure to systemic risks in the housing market. The fund praised both APRA's restrictions on interest-only loans and investor lending, and the home owner grants and stamp duty exemptions recently implemented by several state governments. These policies have seen a strong rise in the number of first home buyers entering the market.
But the IMF also said that state government tax exemptions are "inefficient" and suggested a systemic land tax would capture a wider base of taxpayers and be more productive.
Housing supply was also a major focus of the IMF's comments. The fund stated that "Continued efforts at strengthening housing supply in major metropolitan areas are needed for broad housing affordability." However, recent research by ANU found there's actually a surplus of housing stock in much of the country, suggesting supply isn't the fundamental solution to housing affordability.
You can read the IMF's full comments here.